Policies and Politics of the Transition to Climate Neutrality

Abstract

In order to reach the climate objectives of the Paris Agreement, countries must translate their engagements (integrated into the NDCs) into real climate-mitigation strategies and policies. The policy toolbox for complete decarbonization -including carbon pricing, technology deployment support, standards, phase-out mandates, etc.- have been deeply investigated by economists. They have used different theoretical and empirical models to evaluate the effectiveness and efficiency of such policy measures. However, in the real world, these policies are confronted with political, economic, and social constraints affecting their implementation and effectiveness. Some instruments seem to be more feasible in some economic sectors (a carbon tax for electricity production but not for transport, for ex.) or in some countries. Still, we largely ignore what explain these differences and what does it mean for total decarbonization. How do climate mitigation instruments perform when integrating political-economic constraints? Should (and can) all countries implement the same first-best policy mix, as suggested by many economists? How do market structures (e.g., oligopolies) and other political and economic institutions affect policy effectiveness? This panel proposes discussing the political economy dimension of climate and energy policy instruments, including the interactions between two or more of such instruments and in different countries.

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